Seven Arab states, including Egypt, Yemen, Jordan and Saudi Arabia are meeting in Cairo in a bid to find an effective response to the growing threat of piracy in the Red Sea. Participants have been discussing the need to create a force to protect shipping, as Edward Yeranian reports from Cairo.

Top officials from Arab states flanking the Red Sea are meeting in Cairo in an attempt to mount a joint effort to curb piracy in shipping lanes off the coast of Somalia, in the Arabian Sea and the Gulf of Aden.

Egyptian Foreign Ministry Spokesman Hussam Zaki said the piracy is an "increasingly difficult and unusual situation."

The Arab League, which is also participating in the Cairo conference, condemned the situation off the Horn of Africa Wednesday with Assistant Secretary General Ahmed bin Hali complaining piracy had reached an "unprecedented level of gravity."

Conference host Egypt is increasingly concerned about the effects of the recent wave of hijackings by Somali pirates on shipping through the Suez Canal. Last year, Egypt earned more than $5 billion from the canal.

Three major world shipping companies have announced they are re-routing their vessels to avoid the Horn of Africa, a step that could seriously hurt the canal.

Analyst Mohammed al Shazly, a contributor to the Arab daily al Hayat, said the piracy is "catastrophic" for Egypt and other Red Sea nations:

He said Egypt is seriously affected by the crisis, because revenues from the canal, along with tourism, oil exports and worker's remittances are the four main sources of Egypt's gross domestic product. Yemen, he argues, which is working alongside Egypt to resolve the crisis, is also upset about having a flotilla of foreign warships off its coast.

Al-Jazeera TV reports that delegates from war-torn Somalia are also attending the Cairo conference and that many participants, including the Arab League, are pushing for a political settlement in that country, including a national unity government as the "best option for putting a stop to piracy."

Egyptian Admiral Mahfouz Taha Marzouk, formerly in charge of naval operations in the Red Sea, told al-Arabiya TV that "coordination between the world's navies, in addition to installation of radar in many shipping corridors, would put a damper on piracy."

Mohammed Shazly said the Cairo conference is debating every possible solution to the piracy crisis, military and otherwise.

He said that all options are on the table, including military options, despite the limited capabilities of many Arab states participating at the conference, but that the best options are probably finding mechanisms for coordination, consultation, and exchange of information, as well as installation of pre-warning systems [to alert for pirates], if possible.

The Director of Egypt's Suez Canal Authority, Ahmed Ali Fadel, said Wednesday the canal was being directly affected by the world financial crisis and that piracy is also having a toll on the canal's revenues.

A report by Britain's Chatham House warned the Suez Canal could even "be closed due to mounting piracy in the Gulf of Aden." The report added that 16,000 ships cross the Gulf of Aden, annually, and that 60 cases of piracy have occurred this year, or nearly double the number from last year.

12 ships and 259 crew members are being held by Somali pirates, including the Saudi state oil company's Sirius Star. Pirates are demanding a ransom of $25 million to release the oil-tanker and its crew.